Calculate a reorder point from average daily demand, lead time, and safety stock.
A fast-moving cat litter sells steadily, but vendor lead time means waiting until the shelf is low creates a midweek out. Reorder point = average daily demand x lead time + safety stock. The trap is ordering when the shelf looks low instead of when inventory position falls below the lead-time requirement. Find daily demand Average sales = 98 jugs per week / 7 days = 14 jugs per day. Use a recent clean period. Exclude a one-day stockout if it suppressed true demand. Multiply by lead time 14 jugs per day x 5 vendor lead-time days = 70 jugs…
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